Wednesday, October 22, 2008


Well its official, even during a recession Apple addicts will still go out and buy iPhones, iPods, iMacs and other i-stuff. Lol, ok seriously I got nothing against AAPL..I actually love my iPod Touch and love to trade the stock even more. Its usually one of the more exciting names to watch after an earnings number. This time no different. Looks like the stock is going to gap up at the open and start the day around the 100 level (up 12%). Which was coincidently the most actively traded strike on the call side in the Nov series on Tues. Hmmm, lol.

Anywho, kudos to Steve Jobs for showing up to the conference call this time around. Oh and delivering a decent number for the quarter. Keep in mind that AAPL has been taken out back and sold off pretty violently with the market lately and especially since the RIMM quarter was announced. However, I would not be surprised to see AAPL trade higher in the coming weeks and months but dont expect anything too explosive since this market pretty much sucks.

Getting back to the options trading today. I mentioned the Nov 100 call had the highest volume on the day. 3 times open interest in fact. I usually try to stay away from "gaming" earnings reactions but if I were to, the options pits are where I would look for clues first. Usually in the last hour of the day you start to see some kind of institutional sized action. Whether its straight call buying, spread action, or straight up volatility selling. The options in AAPL are so pumped up with IV that its tempting to do some kind of volatility selling or credit spread. The front month ATM implied vol on AAPL sat around the high 80s Tuesday (down from the 110 high a few weeks ago). That will get smacked down at the open but it looks like the guys that bought long calls or call spreads or maybe even strangles will get a big enough move in the stock to offset this caving in of premium, and thus have a nice pay day in AAPL.

Adam from Daily Options Report had some good thoughts on AAPL pre-earnings and how he would trade the volatility here.

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